Foreign investments in Latvia continue to increase rapidly

There is a noticeable increase in foreign investments in Latvia. Although the total amount of foreign investment is more than 15 billion euros, it is still possible to say that it is less than our Baltic neighbors Estonia and Lithuania. Most of these investments come from countries that are not members of the European Union, such as the United States, Switzerland and Canada. Due to trade wars and other global economic uncertainties, investment volumes in Latvia began to increase.

According to Mārtiņš Panke, head of the Council of Foreign Investors in Latvia, in the last century, foreign investment in Latvia has increased tenfold and continues to grow.

With an important trade agreement made this year, German producer Schwenk bought the northern European market of cement producer CEMEX, and food producer Orkla is building new plants in Latvia.

As in Latvia, foreign investments have started to increase in our Baltic neighbors, Lithuania and Estonia in the past two decades. According to Panke, Latvia attracted more foreign capital than these countries.

According to 2019 data; foreign investment in Estonia is approximately 24 billion Euros, 18 billion Euros in Lithuania and 16 billion Euros in Latvia. These rates show that Latvia is a more competitive and potential country. Foreigners investing in the region decide to invest by comparing these three Baltic countries.

According to Panke, there are different reasons. Estonia and Lithuania managed to establish closer economic ties with their neighbors Finland and Poland. However, one of the main problems in Latvia is the labor problem.

Pointing out the role of local governments, Panke also states that projects preferred by foreign investments are not implemented due to the fact that local people are not open to innovations and objections.

The biggest advantage of investors investing in Latvia is the quality of human capital, professional experts and Latvia being a flexible and small economy. It is also an advantage to easily adapt to various changes. So, which regions do foreign investors invest in Latvia?

According to Panke, it is very difficult to distinguish. Because, some regions are not regions where foreigners can invest. For example, there are some restrictions in the waste management and construction sector. The most suitable sectors for investment are the service and retail sectors.

Panke said Latvia’s long-term competitiveness should be taken into account. In other words, foreigners who want to invest in Latvia prefer Latvia because of the low labor costs, but as demand increases, they can choose other places. According to Panke, there should be new investors with higher added value and a different investment quality in the long run.

Countries such as Sweden, Estonia, Lithuania and Russia are among the countries that invested the most in Latvia.

According to the data obtained from the Latvian Bank, 4/3 of foreign investments in Latvia come from EU countries.

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